This blog aims to provide the latest news and comment relating to Peak Oil, and related issues such as supply of other fossil fuels, renewable energy, sustainability and finance. Global issues are covered from a UK perspective.

Friday, 19 April 2013

Note that I said won't, not can't. We have the technology we need to shift to a renewable-energy powered society, though it would certainly be hard work. And there would also need to be changes in the way we live. But it could be done, if we were willing. However, 'we' includes every individual and organisation, and it's not the hard work that's putting some of them off, it all comes down to money...

This isn't new, but it was on the BBC news today, so I thought it was worth mentioning:

Some 60% to 80% of fossil fuel reserves owned by listed firms could be classed as unburnable if politicians stick to CO2 emission limits, a report warns.The research by the London School of Economics and NGO Carbon Tracker says firms spend billions of pounds of shareholders' money on exploration.It says 200 listed firms spent £440bn in 2012 chasing more coal, oil and gas.It says if this continues for a decade - and if CO2 limits are achieved - they would waste over £4tn....To stick to the current agreed global limit on emissions - which is sure to be breached - the firms would probably be able to emit no more than about 125-275 billion tonnes of CO2 - about a quarter of their assets....The authors say the current fossil fuel business model assumes that there are no emissions limits.

We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We'd have to keep 80 percent of those reserves locked away underground to avoid that fate. Before we knew those numbers, our fate had been likely. Now, barring some massive intervention, it seems certain.Yes, this coal and gas and oil is still technically in the soil. But it's already economically aboveground – it's figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony. It explains why the big fossil-fuel companies have fought so hard to prevent the regulation of carbon dioxide – those reserves are their primary asset, the holding that gives their companies their value. It's why they've worked so hard these past years to figure out how to unlock the oil in Canada's tar sands, or how to drill miles beneath the sea, or how to frack the Appalachians.If you told Exxon or Lukoil that, in order to avoid wrecking the climate, they couldn't pump out their reserves, the value of their companies would plummet. John Fullerton, a former managing director at JP Morgan who now runs the Capital Institute, calculates that at today's market value, those 2,795 gigatons of carbon emissions are worth about $27 trillion. Which is to say, if you paid attention to the scientists and kept 80 percent of it underground, you'd be writing off $20 trillion in assets. The numbers aren't exact, of course, but that carbon bubble makes the housing bubble look small by comparison. It won't necessarily burst – we might well burn all that carbon, in which case investors will do fine. But if we do, the planet will crater. You can have a healthy fossil-fuel balance sheet, or a relatively healthy planet – but now that we know the numbers, it looks like you can't have both.

So what it comes down to is that it's not just that our electricity supply, transport, food production and manufacturing is tied to fossil fuels, it's that a massive chunk of the world's economies are also inextricably linked to them too. If we ever acknowledge the problem and decide to leave some of these resources in the ground, the value of stock markets, pension funds and much else will plummet, as the amounts to be written off dwarf what happened in the 2007-present financial crisis.

I can only think of a few ways this pans out, and none of them are pretty. For example:

We do nothing, climate change accelerates, and by the time we realise we need to change it is too late. Unpredictable weather reduces food supplies and causes localised disasters, eventually impacting the economy sufficiently that fossil fuel extraction slows.

We have a global economic crash, caused by some other factor, and as a result fossil fuel extraction reduces. But this comes at a heavy price, and if we want to build a renewable energy infrastructure that will support us, we need a working economy while we do it.

We agree, globally, that fossil fuel extraction is reduced by a few percent a year. Note that I say extraction, not consumption. The only way to make this work is to get less out of the ground, so that prices stay high and encourage reductions in use. We'd probably focus on coal first, as that's where most of the potential lies. Of course, this will not be pain-free, it would change economics completely, would reduce overall economic activity every year, and would make many assets useless, such as recently built coal power stations.

A recent story in the Guardian covers the same ground from a different angle:

The industrial revolution that kick-started the human impact on the climate was driven by just such a feedback. The steam engine enabled us to drain coal mines, providing access to more coal that could power more steam engines capable of extracting yet more coal. That led to better technologies and materials that eventually helped ramp up production of oil as well. But oil didn't displace coal, it helped us mine it more effectively and stimulated more technologies that raised energy demand overall. So coal use kept rising too – and oil use in turn kept increasing as cleaner gas, nuclear and hydro came on stream, helping power the digital age, which unlocked more advanced technologies capable of opening up harder-to-read fossil-fuel reserves.Seen as a technology-driven feedback loop, it is not surprising that nothing has yet tamed the global emissions curve, because so far nothing has cut off its food supply: fossil fuels. Indeed, though our governments now subsidise clean-power sources and efficient cars and buildings – and encourage us all to use less energy – they are continuing to undermine all that by ripping as much oil, coal and gas out of the ground as possible. And if their own green policies mean there isn't a market for these fuels at home, then no matter: they can just be exported instead....Even the UK, with its world-leading carbon targets, gives tax-breaks to encourage oil and gas recovery and has been growing its total carbon footprint by relying ever more on Chinese factories – and therefore indirectly its reliance on American and Australian coal. And not just that. Although it rarely gets commented on, Britain – along with other supposedly green nations such as Germany – regularly begs Saudi Arabia and the other Opec nations to produce not less oil, but more. As journalist George Monbiot once put it, nations are trying simultaneously to "reduce demand for fossil fuels and increase supply".

It does seem that as we add renewables, they are in addition to fossil fuel use, not instead of, and haven't made any real difference to actual CO2 emissions - check out the graph in the Guardian story above.

I think the only thing we can do is to challenge people in government and industry who support tackling climate change to face up to this issue. Where we go from there is unknown...

Wednesday, 10 April 2013

While most people interested in energy in the UK (myself included) have been focused on our gas supply issues, with the unseasonably cold March, events have been unfolding in other countries that may be a cause for concern.

During past price rises in the price of energy and problems in global supply, poorer countries have often acted as 'canaries in the mine', as their relative lack of financial muscle exposes them to the risk of shortages much sooner than rich countries. This is not surprising, given that our energy markets impose 'rationing by price' when demand rises, supply falls, or both happen at once.

Over the past week, there are three stories that have come to my attention, in Jordan, Thailand and Egypt:

The resource-poor kingdom, which imports 97 percent of its energy, has in the past two years seen the annual cost of those purchases soar above $5 billion (3.3 billion pounds) - equivalent to about 15 percent of its gross domestic product - after supplies of cheap Egyptian gas were disrupted by sabotage of a pipeline to Jordan.Dependent now on costly diesel and fuel oil, Jordan is considering wider electricity rationing and is preparing a hike in electricity prices in June, a politically fraught move in a country which saw street protests last year over fuel subsidy cuts imposed as a condition for a $2 billion IMF loan."Energy is the Achilles heel of the Jordanian economy, it's a huge vulnerability for Jordan...the biggest drain on the economy," Nemat Shafik, deputy head of the International Monetary Fund, said during a visit to Jordan last month.

Interestingly, it is provoking some positive responses, such as improvements in energy efficiency and plans to build large solar farms, but sadly they are still focusing on fossil fuels, for example: pipelines to import crude oil and plans to develop shale oil and gas. Jordan is actually in a similar situation to the UK, only worse, as it seems to have been getting most of its gas through one major import route, while the UK has several. But the lesson is there - if you depend on imports, then disruption to them can turn into a serious problem very quickly.

Thailand

Another Reuters story covers the trouble in Thailand, where technical problems at gas fields in Myanmar have resulted in a shutdown of gas supplies right at the peak of electricity demand.

Government electricity-saving plans - including agreements with factories such as a Thai unit of Toyota Motor Corp to stop operations on April 5 - may prevent blackouts in the short term but point to the potential long-term economic impact.The supply crunch also highlights the difficulties in securing alternatives. Liquefied natural gas is much more expensive, while cheaper coal faces strong opposition after problems caused by pollution in the early 1990s at a coal-fired power plant.

As in Jordan, they are considering other options, but not many of them are renewable:

To strengthen electricity security, Thailand aims to develop an ASEAN power grid to link transmission systems among Southeast Asian countries, said Pongdith Potchana, deputy governor at the state-run Electricity Generating Authority of Thailand.Thailand has already signed deals to buy up to 7,000 megawatts of power from Laos and is aiming to buy either hydro or coal-fired power from Cambodia and Myanmar, he added.But for real security, Thailand needs to double its electricity generation capacity to 70,000 MW by 2030 and the most cost-effective way to do that - and the most controversial - is through coal-fired plants.Imported coal provides power at 2.94 baht per kilowatt hour, cheaper than 3.96 baht for natural gas, as well as the 3.00-5.20 baht for biomass and wind power and the 12.50 baht for solar energy, according to government data....Another way the government can tackle the looming gas shortage is to dampen demand by allowing prices to rise. It has said it wants to raise prices of cooking gas, or liquefied petrolem gas (LPG) and natural gas for vehicles to reflect costs.

The Egyptian government has announced that it will close the Cairo International Airport beginning on June 1 from 1:30 am to 5:30 am in order to save electricity; however, one lane at the airport will remain in operation to receiving incoming flights.While the airport has not been hit by the power outages that have affected the rest of the city because of back-up generators, the energy situation in Egypt continues to deteriorate. Over 95% of the population has access to electricity, but the rising demand has crippled the already battered economy. Previously, the government announced that it would cut power from shops at 9 pm each night, but business owners protested against the change since many places depend on the active Egyptian night time to conduct operations.

In some ways this is worse than a specific technical or political problem restricting energy supplies, as there are no quick solutions to increase supply. Of course, this is also the situation for the UK in the next few years, as we face an ageing energy infrastructure here too, with power stations closing and not many new ones opening that don't rely on imported gas...

Sunday, 7 April 2013

Britain's biggest gas storage site ran dry of normal supply on Friday and is using gas usually reserved for the technical operation of the site, National Grid data showed.Unusually cold weather in Britain has boosted gas consumption, forcing the Rough storage site off Scotland's east coast to take the unusual step of dipping into its so-called cushion or base gas.

What's very useful is that they got some figures out of Centrica on how much of this 'cushion gas' can actually be extracted:

"There is potentially an additional 1.1 TWh (terawatt hours) (100 million cubic metres) that could be produced from the Rough reservoir below this opening stock level... The opening stock published by National Grid may ultimately be at -1 TWh)," Rough operator Centrica said in a regulatory update on Friday.

They finish up by saying:

Gas traders said next week a planned strike by workers on Norway's offshore gas fields could hurt gas flows to Britain.Supply could also be impacted by unplanned outages because of technical problems that are a regular occurrence in the vast network of gas platforms and pipelines that crisscross the North Sea.However forecasted milder weather and two deliveries of LNG to Britain due next week could take pressure off prices, traders said.

So, we can draw a further 100mcm, or 1,100 GWh out of Rough below 'zero'. By 6am on Sat 6 April 2013 we'd already drawn 290 of these GWh of gas out of there, as shown by this screenshot taken from the Prevailing View page:

Thankfully it's warming up now, because soon this store really will be empty... The problem, and cost, of refilling it in time for next winter still remains though...

Friday, 5 April 2013

Yesterday (4 April 2013) afternoon, the UK long-range gas storage facility at Rough went 'below empty' for the first time. This is possible because Centrica normally leaves some 'cushion gas' in the depleted Rough reservoir to make sure there’s enough pressure to keep it flowing properly. Here's the status, taken from the Prevailing View page, showing figures valid for 6am on the 3 and 4 April 2013:

The 4pm udpate today gives the Long Range stock level as -132 GWh, a negative stock level! I got this from the spreadhseet on this page, as the Prevailing View is being a bit slow to update today - maybe it's struggling over what to do with a negative stock level?

It was clear this was going to happen, because the Entry Zone graphs have been showing gas flowing out of Rough at over 20 mcm/day (image shows 24 hours from 4-5 April 2013):

20mcm is about 220 GWh, so with only 108 GWh in Rough yesterday at 6am, it was clear we were going to dip below zero. The fact that we are now burning through this normally untouched 'cushion gas' reserve is a sign of the problems we have right now, and does not bode well for next winter, as everything that is pumped now ought to be put back in before the end of October to guarantee winter supplies.

According to National Grid, gas can be injected into Rough at a rate of 220 GWh/day, and the maximum capacity is 39,405 GWh. In practice, the injection rate varies according to the stock level, because the more gas is stored, the higher the pressure, so the harder it is to force more gas in. I've plotted injection/withdrawal rates vs. stock level from 2007 to date on the graph below (click for a larger version on Flickr):

As you can see, the injection rate can get up to around 300 GWh/day when the store is nearly empty, but drops steadily towards 220 GWh/day as it fills, and drops quickly to 100 GWh/day when it is nearly full. Withdrawals are relatively unaffected by stock level - they are lower at the top end simply because demand is lower, and there are tentative signs of them dropping off a bit at the bottom end, presumably because of the falling pressure.

Anyway, if we assume 220 GWh/day is an average value, this implies 179 days, or about six months, to refill from empty. This year, we will be starting from below what is normally considered 'empty', so it seems unlikely that we will be able to refill the long-range stores by the end of October. Another barrier to refilling storage is planned outages, with the UK's Teeside gas terminal undergoing maintenance from tomorrow and possible reductions in Norwegian gas supplies to the UK from Monday, according to Reuters.

The only action that can be taken in the time available is to launch a crash-programme of energy saving between now and Autumn, insulating homes, improving heating system efficiency and persuading people to wear warmer clothes and turn the thermostat down. Doing this brings a direct benefit, as your heating bills will come down, and if enough of the UK population does it, the reduced demand could help reduce wholesale prices too, as we will be able to import less gas.

Will this action be taken by more than a handful of people? Sadly, I doubt it, as nobody in a position of power is pushing for it.

Wednesday, 3 April 2013

In case you hadn't noticed, winter is not yet over in the UK, and today seems to have brought some new gas supply problems, though there have not been any public announcements about them yet. Below is the raw data, screen-captured from a National Grid website at 10am on 3 April 2013, with some commentary from me.

Here's the first problem - the Bacton interconnector is not flowing (again) - just like on 22nd March. You can see that hte Bacton BBL pipeline has stepped up a bit, but not enough to compensate:

On top of this, the Langeled pipeline has dropped off a bit:

Also, one of our own gas field terminals, St Fergus, is showing lower flow, which can only add to the problems:

Fortunately we have plenty of gas in the LNG stores at the moment, and extra supply is coming online as I type this...

Long Range Storage (from Rough) has also started flowing again - but bear in mind that it is all but empty, so can't do this for long.

The Medium Range Storage is a bit more healthy, and significant flows are coming out of these stores now:

So it looks like we're coping OK for now, but it really doesn't help the situation - in a normal year we'd be refilling gas storage by now, ready for the coming winter, but right now we're drawing the dregs out of it... Hopefully the Bacton pipeline will come back on soon - I'll keep this site updated.

Mike

UPDATE: Gas imports through the Bacton Interconnector restarted at 17:00 BST, albeit at a low level. Tomorrow's update from National Grid will show how much storage went down as a result of the lack of imports today.